“The successful warrior is the average man, with laser-like focus.” – Bruce Lee
If there is a concept that is so widely known but so fully ignored, it is the 80/20 rule or Pareto principle. It is the idea that 20% of the inputs produce 80% of the outputs and is a method to help you focus your efforts where you can make greatest impact.
BUT.... the world does not operate like this in practice. Many people are:
Busy but unproductive: That feeling of having been hard at it, but not having much to show for it.
Putting in inputs without seeing output: Spending money consistently on marketing channels that do not return leads.
Debating inconsequential minutiae: How often have we heard the margarine vs butter debate?
Looking to blame others: We are starting to turn on international institutions and different groups (unemployed, old, immigrants etc) for problems of our own making.
I am convinced that the 80/20 rule is a useful lens for us to answer the question "how should I use my focus". I will be referring to this idea in future posts around policy.
What benefits do you get from 80/20 thinking?
It helps reduce the number of things you need to think about reducing overwhelm
It helps you make decisions more quickly
It makes you feel productive with your time
It leads to more fulfilling days
The 80/20 rule in practice
You incorporate 80/20 thinking into your life in 5 steps.
Step 1: Identify your objective
It could be something like this year's profit, or growth or number of customers.
Step 2: Research what drives your objective
Example to attract customers: Who is buying (age, gender, area etc)? What they buying? how are they buying (online, through affiliates etc)? and when (which day, week, month?)
80/20 analysis is best when it can boil down the key drivers to around 3 things.
Step 3: Eliminate the trivial many:
Once you have identified what matters, the mentally hard thing to do is eliminate the trivial many.
Even though the numbers tell us it is not fruitful, we find it hard to give up breadth and even harder to have difficult conversations around priorities.
To do this properly you need to have some principles, for example with time:
Invert it - if I had a blank diary, which items in my diary would I keep? Keep the ones that help you focus on your drivers.
If in doubt, eliminate it. You will get to review your focus again soon in step 5.
Step 4: Lean into to your high impact areas
Customise: for example, if you find you are popular with 45 year-old health-conscious people, you can hone your message and marketing channels towards that demographic.
Make investments: If you are now focusing on a certain demographic, you could invest time and capital to get even larger returns on that group.
Keep saying no: The empty space in your diary can get filled up quickly - keep going with your ruthless focus.
Step 5: Review and Adjust
Review your progress: at a suitable time, long enough away to get a sense of the impacts, but short enough to be able to adjust without too much impact.
Know when you have reached optimal focus: Has your focus meant you risk pushing too much in a certain direction such that your returns are plateauing out?
When the 80/20 rule does not work
Personal relationships: sometimes you just need to be around for someone in an 'inefficient' way. It's not always possible, but it is nevertheless important.
Ethics: Any shortcuts around ethics could have huge long-lasting reputational risk.
Risk of large loss: whether it's an all-in bet, a nuclear facility or a plane, the 20% is important too.
When innovation is important: It is sometimes important to allocate bandwidth to experimentation, particularly when in an innovative field. Whilst a milk manufacturer might find that it has most bases covered, a robotics or AI firm might have many different places to go.
So what?
The 80/20 rule is a valuable decision-making tool that can help you reduce overwhelm, speed up decision-making, increase productivity and make your days more fulfilling.
It takes discipline but in 5 steps, of i) identifying your objective, ii) researching key drivers, iii) eliminating the trivial many, iv) leaning into high-impact areas and v) reviewing and adjusting you can get your arms around the opportunities ahead.
It's also important to note where this approach does not work, and that is in personal relationships, making ethical considerations, in high-risk situations and innovation.
Next week I will be discussing "What are laws anyway?". Until then, please sign up to receive the blog directly to your email at Blog | Deciders.
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